The end of the (ad agency) world as we know it?

22 May 2018

As the advertising and media sector adjusts to a landscape without Sir Martin Sorrell as the face of WPP, speculation turns to both the future of the world’s biggest media agency and the repercussions of the ad mogul’s resignation on the wider industry. Pivotal to these discussions is whether the constituent agencies themselves are also outdated.

But even before the announcement of Sorrell’s departure, the fluctuating fortunes of these organisations have been well documented.

It’s clear that the model that has served the ad agency well for many years may no longer be tenable. Revenues are flat or declining, margins are shrinking and consultancies have their foot firmly in the advertising door. Meanwhile, brands are bypassing agencies to take their advertising in-house, while calling them out on hidden fees and demanding transparency throughout the digital advertising supply chain.

The technology platforms, once hailed as oil for the wheels of digital advertising, now wield the power in the bloated ad tech landscape.

While some demand side platforms (DSPs) do help agencies to use their in-depth knowledge to create new value and provide bespoke solutions for each client, many offer little in the way of flexibility and therefore cannot be customised for the needs of each advertiser, or individual campaign, or specific business goal.

Combining these facts with the current theories, it seems inevitable that the holding company of the future will be changed, potentially broken up into smaller entities as is currently being predicted. But those entities themselves will also have to adapt to their new environment, take control and show differentiation at a time when there is a power vacuum in the agency world.

So what could the agency of the future look like?

Radical transparency will be the norm

The legacy of agency fees, the ‘tech tax’, ad misplacement, brand safety, viewability and ad fraud mean that brands will continue to demand transparency. Tools such as ads.txt and potentially ads.cert will be adopted – and other solutions developed – but smart agencies will have got ahead of the curve by demonstrating radical transparency and showing where they create real value for clients, helping them to meet their business goals.

Technology will be a differentiator

Ad tech has been blamed for many of the industry’s ills, but this catch-all neglects that the right technology can help an agency stand out from the crowd with tools that are complementary to their service model and enable the ability to bring forward insights and bespoke solutions for different clients.

Instead of selecting from a small pool of ad tech systems, making it difficult to justify any unique value, agencies will instead look at how they can combine, build or use technology in novel ways that solve real business problems for their clients

Horsepower will win out over hype

The right technology is one requirement, but agencies will also learn to roll up their sleeves, get their hands dirty and understand exactly what is under the bonnet of the technology they buy and use. They will be adept at knowing the tools that offer horsepower, while being mindful of shared system logic that could compromise their client goals, in order that they can recommend what is right for each client and why.

Bland metrics will be replaced by brand-specific measurement

The end game must always be to support clients and the performance of their brands. This means identifying the specific metrics that matter most for each client, and putting in place the bespoke buying and optimisation strategies that will enable these to be met, rather than falling back on bland digital metrics that can too often be manipulated.

The trust relationship will be reinstated

In the ‘old days’ of advertising, agencies were brands’ trusted advisers, but this expertise has been eroded. Adopting new tactics including those outlined above, agencies will reverse this position, putting themselves back in the driving seat and becoming the experts again, leveraging client data and defining strategies.